17/11/2009[Company watch]WuXi Pharma Feels the Worst of the Downturn Is Over

WuXi PharmaTech , a bellwether for Chinaâ€™s CRO industry, reported a modest increase in Q3 revenues, but clearly feels the worst of the economic downturn is in the past.

WuXi PharmaTech , a bellwether for Chinaâ€™s CRO industry, reported a modest increase in Q3 revenues, but clearly feels the worst of the economic downturn is in the past. Revenues move up 10% to $70 million, and net income (non-GAAP) was 33% higher at $17.6 million. The company reiterated its guidance for 2009 revenues ($265-$275 million) while raising its estimate for 2009 adjusted EBITDA ($86-$90 million, up $5 million). China-based Laboratory Services division is the companyâ€™s best performing segment.
Revenues from China-based Laboratory Services rose 29% to $48 million, about 69% of the companyâ€™s total sales. The biggest problem for WuXi PharmaTech was its Manufacturing Services division, which saw its revenues decline 44% to $5.7 million. WuXi is quick to point out that the divisionâ€™s sales are volatile, depending on customers\' delivery schedules. The US Laboratory Services divisionâ€™s revenues were down 1%. During the third quarter, WuXi PharmaTech increased its headcount by about 400 people to a total of 4,135, of whom 3,230 are scientists. The company is on track to make capital expenditures of $55-$60 million in 2009. It hopes to offer GLP toxicology services by mid-2010. It has completed a large-scale manufacturing facility, which is now undergoing tests. WuXi said the start date for manufacturing would depend on the progress made by clients in advancing their drugs through clinical trials.